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Anacor Falls On Positive But Disappointing Toenail Fungus Data

Tickers in this article: ANAC VRX

PALO ALTO, Calif. (TheStreet) -- Anacor Pharmaceuticals' (ANAC) toenail fungus therapy tavaborole achieved the "complete cure" goal of a phase III study but the drug's efficacy appears to be inferior to a competing drug from Valeant Pharmaceuticals (VRX) and only on par with a currently approved treatment.

Shares of Anacor are down 25% to $3.84 in early Tuesday trading on the positive (but still disappointing) tavaborole study results.

In the phase III study of 600 patients with toenail fungus (onychomycosis), 6.5% of patients treated with tavaborole achieved a complete cure compared to 0.5% of patients treated with an alcohol-based delivery vehicle (essentially the placebo.) The 6% control-adjusted difference in cure rate favoring tavaborole was statistically significant and met the primary endpoint of the study.

Complete cure was defined as the percentage of patients in each arm who were fungus free (mycologic cure) plus had completely clear nails after 52 weeks of treatment.

While Anacor's phase III study was successful, tavaborole appears to be less or equally effective as competing and current treatments for toenail fungus.

In two phase III studies recently published, Valeant's efinaconazole demonstrated complete cure rates of 17.8% and 15.2% compared to placebo rates of 3.3% and 5.5%. Valeant used the same definition of complete cure as Anacor is using for its phase III studies. The FDA is currently reviewing efinaconazole, with an approval decision date of May 24.

The other relevant comp is Penlac, currently the only approved topical treatment for toenail fungus. Penlac's complete cure rate is in the 5-8% range, according to the drug's FDA-approved label. That's similar to the tavaborole cure rates reported today by Anacor.

Anacor is conducting a second phase III study of tavaborole. Results are expected in March.

-- Reported by Adam Feuerstein in Boston.